Thursday, December 31, 2009

Here are some well-known New Year's Day quotes to help us bring in 2010:

"Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man." - Benjamin Franklin

"New Year's Day: Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual." - Mark Twain

"For last year's words belong to last year's language. And next year's words await another voice. And to make an end is to make a beginning." - T.S. Eliot "Little Gidding"

"Good resolutions are simply checks that men draw on a bank where they have no account." - Oscar Wilde

"Glory to God in highest heaven, who onto man his son hath given. While angels sing a tender mirth, a glad new year to all on earth." - Martin Luther

Posted by Tracy Green. Wishing all of you a wonderful 2010! Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. The firm website is: http://www.greenassoc.com/

Monday, December 28, 2009

On December 7, 2009, a publisher of Russian-language newspapers and magazines, Andranik Petrosian, of Burbank, California was sentenced to 96 months in prison by United States District Judge Stephen V. Wilson in the Central District of California. In addition to the prison term, Judge Wilson ordered Petrosian to pay $521,845 in restitution to the Internal Revenue Service.

This sentence followed his trial in April 2008 where a federal jury convicted him of conspiracy to defraud the Internal Revenue Service and making false statement to special agents with the IRS.

The allegations in this case were that Mr. Petrosian used his publications – which included the newspaper Contact Weekly and the magazines Kakadu and Tet-a-Tet – as fronts to launder more than $10 million for medical companies some of which were alleged to be entirely fraudulent. It was essentially a phony or inflated invoice arrangement - masquerading as a check cashing arrangement.

As detailed in the indictment, the "cash back" or laundering arrangement worked as follows. Beginning in 2003 and continuing through 2007, the medical companies wrote checks to Mr. Petrosian's companies for advertising or graphic design services that were significantly in excess for the services provided. Mr. Petrosian's companies provided invoices for the "advertising" or "graphic design services" which allowed the medical companies to falsely deduct the entire payments on their tax returns. While Mr. Petrosian did place advertisements in his publications, these advertisements were worth only a small fraction of the price paid by medical companies across the Southwest.

Mr. Petrosian would deposit the checks made payable to his businesses and, subsequently, would give cash back, less a fee of up to 10%, to his "advertisers." The "advertisers" would use the false invoices to fraudulently substantiate expenses used in the preparation of their tax returns which were subsequently filed with the IRS.

In the trial, it was alleged that Mr. Petrosian returned approximately 90 percent of the money from the checks back to the medical company administrators in cash. The cash was allegedly handed over in white envelopes during back-office meetings at Petrosian’s office on Glenoaks Boulevard in Burbank. Mr. Petrosian allegedly obtained large quantities of cash, either by smuggling cash into the United States derived from wire transfers to Armenia, or via an elaborate Hawalla-type money-changing system.

It was also alleged that the medical company administrators used the cash Mr. Petrosian returned to make cash payments to patients and cappers/marketers. Based on my experience in these cases, these arrangements were also used as a means of the businesses who are "advertising" to obtain tax free money for other purposes as well.

The U.S. Attorney's Office contended that Mr. Petrosian's operation fueled medical insurance fraud schemes by providing a steady stream of untraceable cash. In one such scheme, it was alleged that a clinical laboratory used the cash Mr. Petrosian provided to make illegal kickback payments to clinics in exchange for the clinics referring blood samples to the laboratory for analysis. The payments motivated the clinics to refer patients for medically unnecessary tests that were paid for by Medicare.

At the sentencing hearing, Judge Wilson said the evidence at trial showed that Petrosian was at the “fulcrum” of a money-laundering scheme that helped perpetrators of health care fraud avoid paying federal taxes.

Posted by Tracy Green. Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. Green & Associates in Los Angeles, California focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

There was a recent qui tam settlement by the State of California. On December 17, 2009, the California Attorney General's Office announced a $21.3 million settlement with Schering-Plough Corporation, resolving allegations the company "deliberately inflated" the price of Albuterol and other drugs, causing California's Medicaid (Medi-Cal) program to overpay millions of dollars in pharmacy reimbursement.

Albuterol is a widely prescribed generic drug, delivered through inhalers, nebulizers and masks, and used to treat asthma and other breathing problems.

The settlement stems from a lawsuit filed by a whistleblower against several pharmaceutical companies accused of Medicaid fraud. The case is still proceeding against Dey, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc. and their parent companies. Schering-Plough recently merged with Merck, and is now known as Merck & Co.

California's $21.3 million agreement is one of three settlements negotiated with Schering-Plough, collectively totaling $69 million, over falsely inflated drug prices. The three lawsuits were originally filed by a whistleblower, Ven-A-Care of the Florida Keys, Inc., on behalf of California, Florida and the federal government. Schering-Plough also reached settlements with Florida and the federal government, the latter for approximately $44.5 million.

The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices (AWPs) it reported to California for Albuterol. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWPs reported by drug manufacturers.

California pharmacies dispensed Albuterol to patients and were then reimbursed by Medi-Cal. By reporting falsely inflated AWPs, some drug manufacturers caused Medi-Cal to overpay millions of dollars in pharmacy reimbursement. Medi-Cal is funded on a roughly 50% - 50% basis by the federal government and the State of California.

Reporting fraudulent AWPs is a violation of the California False Claims Act. Ven-A-Care filed a lawsuit under seal in Superior Court, then it was removed to the U.S. District Court for the Central District of California and finally transferred to U.S. District Court of Massachusetts. The Attorney General's Office investigated the claims, and in 2005, intervened in the lawsuit with its own complaint, currently being litigated in federal court in Boston.

The California Department of Health Care Services, which is responsible for administering Medi-Cal, will receive $20.1 million, and the Attorney General's False Claims Fund will receive just over $1.2 million.

Posted by Tracy Green. Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. Green & Associates in Los Angeles, California focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Sunday, December 20, 2009

On December 11, 2009, an 88-year old audiologist Adam John Sotrini was sentenced by United States District Judge Oliver W. Wanger, to six months in prison to be followed by 15 months of home confinement, plus restitution of $100,000, for his scheme to defraud the Medicare program by submitting false billings for audiology services.

A jury found him guilty of 17 counts of mail fraud and one count of health care fraud on November 4, 2008. According to the Assistant United States Attorneys who prosecuted the case, the evidence introduced at trial showed that Mr. Sortini visited skilled nursing facilities throughout Northern California and billed for hearing tests that were not reimbursable by Medicare because they were routine in nature and were performed without a referring physician’s order.

It was contended at trial that Mr. Sortini also did not perform all of the tests for which he billed Medicare, and when he was audited by Medicare, he submitted forged physician referrals to justify his Medicare billings. The government presented evidence at trial that Mr. Sortini billed Medicare for unwarranted and unnecessary hearing tests, including tests for patients with severe mental deterioration including Alzheimer’s disease, dementia, and senility, and claimed on certain days to have tested between 25 and 50 or more patients at skilled nursing facilities located more than 100 miles apart.

Mr. Sortini billed and was paid hundreds of thousands of dollars for these services. This continued from January 1998 to January 2003, when the FBI conducted a search warrant at his office in Merced.

Mr. Sortini testified at trial which, based on the judge's comments at sentencing, was in hindsight a mistake. At sentencing, Judge Wanger found that Mr. Sortini had obstructed justice by committing perjury at trial, had abused the trust of the Medicare program, and had taken advantage of vulnerable, elderly victims, many of whom were mentally incompetent. The judge took into account Mr. Sortini’s age and medical condition, but determined that a prison sentence was warranted given the nature of the defendant’s fraud.

Attorney Commentary: This case illustrates why there are so many plea bargains in the federal court system. With this loss amount, a prison sentence normally would have been unlikely. However, when a trial is lost by a criminal defendant -- prison term is the likely outcome. In addition, when the trial is lost and the defendant has testified -- the judge has the discretion to say that he did not believe the defendant's testimony and increase his or her sentence for obstruction of justice.

There has been significant fraud and abuse in the Los Angeles area for audiology. However, medical necessity is not usually the stuff of federal health care fraud cases. In this case, the forging of records helped establish fraud.

It is also not uncommon for elderly doctors and health care providers to be taken advantage of by entrepreneurs in the health care business. It is quite unusual for someone of the age of 88 to be sentenced to prison but the judge's comments reflect his outrage. The climate in federal sentencing does not favor health care fraud defendants especially when the health care system and federal and state budgets are in a crisis. Sentencing in federal court is practically a separate trial in itself since it is vastly different than state court sentencing.

Posted by Tracy Green. Should you have any questions regarding your own situation or this post, you can email Tracy at tgreen@greenassoc.com. Green & Associates in Los Angeles, California focuses their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Thursday, December 3, 2009

On December 1 2009, Luis A. Baez of Miami was arrested and charged with obstruction of a health care fraud investigation in violation of Title 18, United States Code, Section 1518. The Indictment charging him was also unsealed.

An Indictment is only an accusation is not evidence of guilt. Mr. Baez is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

According to the Indictment, statements made in court, and documents filed in court, in January 2007, Mr. Baez allegedly told an FBI Special Agent who was conducting an investigation involving Med-Pro of Miami, Inc., that he had no knowledge of an entity known as the L. Baez Corporation or activities associated with the L. Baez Corporation. Mr. Baez allegedly knew this information was false.

The Med-Pro investigation ultimately resulted in several indictments and convictions of various individuals for health care fraud and money laundering schemes involving millions of dollars in fraudulent reimbursement claims submitted to Medicare. According to documents filed in one of the Med-Pro cases, the L. Baez corporation was used in connection with laundering proceeds of health care fraud.

At Mr. Baez's initial appearance in court, it was reported that Mr. Baez had been working at two local hospitals up until the time of his arrest. Mr. Baez’s bond was set at $50,000. As a condition of his bond, Mr. Baez is prohibited from working in the health care industry while charges are pending. Mr. Baez faces up to five years’ imprisonment and a fine of up to $250,000 if convicted.

Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

Attorney Commentary: The lessons to be learned from this arrest and bail setting are two-fold. First, being interviewed by the government when you are going to be less than truthful is a terrible idea to be avoided at all costs. If an interview is in your best interest, you must have an attorney with whom you have been completely truthful so an objective person can evaluate whether or not you should be interviewed and whether or not you can be truthful by an objective standard. At that point, the attorney can negotiate the proffer with the prosecution or investigating agency.

If you are not truthful, you will either (1) be charged separately with obstruction of justice or (2) if other charges are filed against you, at sentencing in federal court there could be an upward adjustment for obstruction of justice. In addition, if the prosecution was considering not charging you and using you as a witness, your lies to the FBI agent, OIG special agent or other law enforcement official could result in your being charged since your lies could render you useless as a witness. Assume that the government investigators know much more than you think and that a good portion of your interview will essentially be a lie detector test to determine if you are being truthful.

Second, it is becoming more common for the condition of not working in the health care industry to be a condition of bail in federal cases. I will probably become more common in state cases. This condition should be anticipated before the initial appearance and if there are ways to differentiate your work (especially if it does not involve billing government programs) this should be brought forth to the government and there should be an effort to resolve this bail issue before the court appearance. I have seen in court the prosecution ask for this condition and the defense attorney and defendant are caught off-guard and without any ability to offer other work alternatives or the idea of having pretrial services supervise or approve the work position.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

Wednesday, December 2, 2009

The Kerlan Jobe Orthopaedic Clinic, a sports medicine clinic in Los Angeles, has agreed to pay the United States $3 million to settle allegations that it received illegal kickbacks from HealthSouth Corporation. The Justice Department announced this civil settlement on December 1, 2009.

The settlement resolves allegations that HealthSouth paid kickbacks to Kerlan Jobe in the form of stock option grants, donations to the Kerlan Jobe Foundation, loan forgiveness on an equipment lease, and a disproportionately high ownership interest in a jointly owned ambulatory surgery center.

In exchange for the illegal kickbacks, Kerlan Jobe allegedly referred patients to HealthSouth facilities. As a condition of continued participation in government healthcare programs, Kerlan Jobe was required to enter into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services to address Kerlan Jobe’s financial relationships with referral recipients.

This settlement follows a December 2007 settlement between the United States and HealthSouth in which HealthSouth paid the United States approximately $14.7 million to resolve HealthSouth’s liability for improper financial relationships with Kerlan Jobe and an Alabama sports medicine clinic, which HealthSouth’s then-new management self-reported to the government.

The investigation was a joint effort by the Civil Division of the Justice Department, the U.S. Attorney’s Office for the Central District of California and the Office of Inspector General of the Department of Health and Human Services.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers. Their website is: http://www.greenassoc.com/

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